Investing In Times Like These
13 November 2023
To all Financial Friends
Whilst we can see some positive signs within the investment holdings of many Financial Friend students (see below) we cannot ignore two wars and the overall economic background. Russia/Ukraine has and does worsen the outlook for inflation. Martin Wolf, economics editor of the Financial Times suggests that if the Israel/Hamas war is contained 'then the economic effects will stay insignificant'. Understandably his commentary goes on to correctly say 'it is possible that it will spread and become far more serious.'
We surely deeply pray that the conflict is contained, but investors fearing otherwise could shortly be moving funds into the military/defence sectors, oil and energy, agricultural products, healthcare, infrastructure and safe haven products including gold. I absolutely do not enjoy contemplating anything less than a peaceful outcome, but my responsibility is to keep my Financial Friends aware and informed.
There are a number of Exchange Traded Funds (ETFs) that can track indices in the sectors of the market indicated above, often at low cost because of the passive (non-active) management involved. Information and guidance on understanding ETFs and their use in your portfolio is available - arrange a zoom 1-211 with me for help in this area.
Trusting the Israel/Hamas war is contained then your chosen portfolio of holdings - defensive or positive - may not be of concern.
Over Just The Last Month.......
Whilst the assets held by the many Financial Friends are wide and various,the main body of friends hold their investments across a range of some eleven funds from technology to UK and American equities, gold, infrastructure, natural resources and index linked gilts etc. In the last month, out of those eleven funds, seven have gained in value. The range of returns are between +3.13% index linked gilts to -2.86% UK equities.
Traditionally, investments are seen as for the longer term. Over the last five years (including breaking through Covid) this is the very positive picture:
Global Technology: +91.70% Natural Resources +47.45% American Equities +44.95% Gold and Silver +40.05% Global Infrastructure +25.53% UK Infrastructure +6.4% Global Bonds +4.09% Multi Asset fund: +2.05% Corporate Bond +1.92% UK equities -6.52% Index Linked Gilts -24.66%
Of course past performance is no guide (good or bad) of future performance and as can be seen investments do fall as well as rise in value.
The shocking loss in Index Linked Gilts, as we have commented on here before, is a mystery it seems to the whole market. In addition to and adding to my commentaries we have input from stockbroker Tom Murphy (chartered financial planner) and senior global economist Dr. Peter Warburton. In recent conversations with Peter he has kindly said he will provide his thoughts on the background behind index linked gilts and then something of what he sees for this asset in the future. When available I will inform you.
You may need help thinking this through which is why I am here. Do not hesitate to arrange a Zoom call - here is the calendar link to arrange a time and date for the guidance and information you need. www.calendly.com/yourfinancialfriend
PLEASE NOTE: A financial or economic commentary like these, are written to explain, interpret or give an opinion on economic events and markets to help readers understand what’s happening and why it matters. Designed to help you make informed decisions of your own by making you aware of opportunities, risks and potential rewards in the market.
